Population Ageing and the Sustainability of the Spanish National Health System: Some Financial Policy Alternatives
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Population Ageing and the Sustainability of the Spanish National Health System: Some Financial Policy Alternatives Gemma Abio Roig Departament de Teoria Econo`mica, Facultat de Cie`ncies Econo`miques i Empresarials, Centre d’Ana`lisi Econo`mica i de les Polı´ tiques Socials (CAEPS), Universitat de Barcelona, Avda. Diagonal 690, 08034, Barcelona, Spain. E-mail: [email protected]
This paper aims to assess the long-term financial sustainability of the Spanish national health system using Generational Accounting, and investigates the effects of several financial options that governments may use to face the challenges posed by the demographic ageing process. Our results indicate, first, that population ageing will have a substantial impact on future health care expenditure, although the examination of past health expenditure trends seems to indicate that ageing is not the main force behind their growth. Second, we find that the policy proposals put forward to date to solve the financial problems of the health system are clearly insufficient to cope with the levels of expenditure predicted for the future. The Geneva Papers (2006) 31, 557–580. doi:10.1057/palgrave.gpp.2510104 Keywords: National Health System; Generational Accounting; population ageing; healthcare expenditure
Introduction The financial sustainability of the health system is a recurrent issue in the debate on public financial policy. The ageing process currently experienced by most developed countries arguably puts pressure on the financial sustainability of a number of public policy programmes, in particular the pay-as-you-go pension system, the public health system, and the long-term care system. However, while there is abundant evidence of age-related effects in income replacement expenditure, the effect on health utilization and expenditure is less clear-cut. Assessing the effects of government fiscal performance, and in particular the likely impact of different financial policy reform proposals, requires a long-run perspective in which the economic conditions and the age structure of population may change. Short-run changes in health expenditure may well be sensitive to changes in the political environment1 or in the system of economic incentives.2 Using the methodology of Generational Accounting, one can assess the extent to which demographic changes challenge a given social policy, assuming that the age
1 2
Rico and Costa-Font (2005). Lo´pez-Casasnovas et al. (2005).
The Geneva Papers on Risk and Insurance — Issues and Practice
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pattern of tax payments and transfer receipts remains constant in relative terms. This method also allows investigation of the effects of policy reform proposals on the public budget. While the sustainability and reform of the public pension system has been widely analysed through this methodology,3 only a few Generational Accounting studies have assessed the fiscal sustainability of public health insurance in isolation,4 and this is the first such study for Spain. Costa-Font and Patxot5 use Generational Accounting to anal
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